Ten Michigan Cannabis companies are in receivership according to documents provided to Four20 Post by the Cannabis Regulatory Agency under a Freedom of Information Act request.
Cannabis Attorney Scott Roberts, of Oak Law, said bankruptcy is governed by federal law and is under the jurisdiction of federal courts, and marijuana remains illegal under federal law.
Federal courts have determined that marijuana companies cannot avail themselves of the protections of bankruptcy as they are operating illegally under federal law, he said.
“Given their inability to file bankruptcy, cannabis companies and their creditors have instead turned to state receivership law, which varies from state-to-state. Under a receivership, a state court appoints a receiver to take custody and control of a business’s assets in order to pay off the business’s creditors,” Roberts said. “While both bankruptcy and receiverships allow creditors to recover debts from a company, receiverships do not provide the same level of debtor protections as filing for bankruptcy.”
When you file for bankruptcy protection, a discharge from the court will relieve you of your obligation to repay your creditors for certain debts. As noted, once your debt is discharged, your creditors cannot contact you or attempt to collect the debt in any way. Companies that file for bankruptcy also can reorganize, cut a deal with credits, and again become solvent.
Receivership is a situation in which a company cannot meet its financial obligations and is said to be insolvent.
The Michigan companies currently in receivership include:
EGC Enterprises
SSQ Industries
HEV03 LLC
Windsor Township LLC
Green Peak Industries LLC
The District Park LLC
3Fifteen
JJack LLC
ABC 123 Business Ventures
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By Four20 Post Editor Mike Brennan
